Food & Drink

Introduction

This Food and Drink information leaflet, sets out the rates of VAT on supplies of food and drink when made by Wholesalers, Retailers and/or Take-Away’s, Caterers and Vending machines.

General

The supply of food for human consumption is subject to a number of different rates of VAT, depending on the food concerned and on how it is supplied. In general, most food sold by retail shops is subject to VAT at the Zero rate, but there are many exceptions specified in the legislation where the Standard, Reduced rate or Second-Reduced rate is to be applied. These exceptions are set out below under the specific headings Wholesalers, Retailers, Take-aways, Caterering and/or Vending Machines. The Summary table to this leaflet gives examples of the VAT rates applicable to the supply of food and drink by different outlets in various scenarios.

In addition, while food is not defined in the Value-Added Tax Consolidation Act 2010, (VATCA 2010), a limited number of food supplements may also benefit from the Zero rate, provided they fall within the ordinary and everyday meaning of "food". Products that do not fall within the ordinary and everyday meaning of "food" cannot benefit from the Zero rate and will be liable to VAT at the Standard rate.

The term "catering" used in this leaflet includes the provision of food and drink, services by cafés, canteens, caterers, location caterers, hotels, public houses, restaurants, retail shops, and similar businesses.

The term "hot food and drink" in this leaflet refers to cooked food which has been heated, has been retained heated and is supplied while still warm after cooking enabling it to be consumed at a temperature above the ambient air temperature and that is above the ambient temperature at the time when it is provided to the customer. It includes items such as burgers which consist of hot meat enclosed in a cold bun, cooked chickens and similar food. The term does not include freshly baked bread which may have residual heat after baking at the time of purchase.

Rates Applicable

Zero Rate

The Zero rate of VAT applies to the supply of most foodstuffs, such as bread, butter, cheese, cereals, condiments, flour, fruit, herbs, meat, milk, pasta, pastes, sauces, soup, spices, sugar, and vegetables (fresh or frozen). This list is by no means exhaustive.

However, it should be particularly noted that the supply of food and drink that would normally be liable to VAT at the Zero rate becomes liable to VAT at the Second-Reduced rate when it is supplied in the course of catering or by means of a vending machine. Such food is also liable to VAT at the Second-Reduced rate when it is supplied hot as set out above.

Standard rate

The Standard rate of VAT applies to certain items of food and drink which are excluded from the scope of the Zero rate, such as the following:

Ice cream, frozen desserts, frozen yogurts and similar frozen products, and prepared mixes and powders for making any such products or similar products;

savoury products made from cereal or grain, pork scratchings, and similar products such as vegetable crisps, prawn crackers, poppadums,

potato crisps/sticks/puffs and similar products made from potato, potato flour or potato starch;

popcorn, salted or roasted nuts;

biscuits and wafers wholly or partly covered or decorated with chocolate or similar product; and;

all kinds of chocolates, sweets and similar confectionery.

Reduced Rate

The Reduced rate of VAT applies to certain flour or egg based bakery products, including cakes, crackers and certain biscuits and wafers, but excluding items in this category that are subject to the Zero or Standard rate of VAT.

Second-Reduced rate

The Second-Reduced rate of VAT applies to certain food and drink supplied by means of vending machines in the course of catering or when supplied hot as set out above, as follows :

Wholesalers/Retailers/Take-Aways

Wholesale and/or Retail Supplies

In general, most food sold by wholesale and retail shops is subject to VAT at the Zero rate but there are many exceptions specified in the legislation where the Standard rate, Reduced rate or Second Reduced rate is to be applied. See “General” above. The Summary table to this leaflet gives examples of supplies of food and drink and the rates applicable by the various outlets.

Retail Outlets providing Café and Restaurant Services

If your retail outlet also operates a restaurant or café service then your business will be regarded as carrying on a separate activity of catering. This means that the food you normally supply at the Zero rate in your retail trade will be liable to VAT at the Second Reduced rate when it is supplied in your catering trade. It also means that certain food and drink (except alcohol, bottled waters, soft drinks, sports drinks and vegetable juice which are liable to VAT at the Standard rate in all circumstances) that would normally be liable to VAT at the Standard rate and Reduced rate may also be liable to VAT at the Second Reduced rate when supplied in the course of catering or in the course of a meal. For further information please refer to General above and Catering below. The Summary table to this document includes examples of some of the most popular items.

If you operate in this manner then you should take particular care to maintain accurate records that distinguish take-away food and drink sales from food and drink supplied in the catering service. Failure to maintain accurate records that correctly identify the supplies concerned could lead to an assessment of additional liability to VAT, together with associated penalties and interest.

Take-Aways

For traders whose business does not consist entirely of Take-Aways please refer to Cold Food Take-Away Sales – Concession in the Catering Section below.

Catering

The term "catering" used in this leaflet includes the provision of food and drink services by cafés, caterers, location caterers, hotels, public houses, restaurants, staff canteens, take-aways and similar businesses.

VAT Rates Applicable:

Supplies of alcohol, bottled waters, soft drinks, sports drinks, vegetable juices are liable to VAT at the Standard rate in all circumstances in the course of catering.

All other food and drink, including fruit juices, supplied with a meal in the course of catering, is liable to VAT at the Second Reduced rate even where it is liable otherwise at either the Standard rate (such as ice cream) or at the Zero rate.

Cold Food take away sales – Concession

Although Zero rated cold food supplied in the course of operating a hotel, restaurant, public house, canteen or similar business is liable at the Second Reduced rate, you may apply to the Revenue District responsible for your tax affairs to have the cold food take-away activities treated concessionally as a separate activity to your catering business, and to apply the Zero rate to such take-away sales.

It will be a condition of such concession that you keep and maintain accurate records which correctly identify the amount of cold take-away sales and also the amount of hot take-away sales. If such records are not kept and maintained, Revenue may revoke the concession, refuse to allow you to continue to have cold take-away sales treated as a separate activity at the Zero rate and raise an assessment for VAT based on the appropriate rate/rates.

Staff Meals

Admissions to Dinner Dances

Receipts from admissions to dinner dances are liable at the Standard rate including the dinner element in the charge. If there are separate charges for the dinner and the dance and payment of the charge for the dinner is not a condition of admission to the dance, the dinner charge is liable at the appropriate rates as outlined above, and the charge for admission to the dance is liable at the Standard rate (see separate VAT Information Leaflet Dances).

Vending Machines

Generally, food and drink sold via a vending machines attracts the rate of VAT applicable to the item sold. Please see General section for specific rates. However, the Second Reduced rate applies to the following:

Tea, coffee and cocoa drinks.

Food and drink normally liable at the Zero rate, such as sandwiches, rolls or milk.

Further information

Enquiries regarding any issue contained in this Information Leaflet should be addressed to the Revenue District responsible for the taxpayer's affairs. Contact details for all Revenue Districts can be found on the Contact Details page.

This information leaflet which sets out the current practice at the date of its issue is intended for guidance only and does not purport to be a definitive legal interpretation of the provisions of the VATCA 2010.